A community association or HOA is only as strong as its board. This is the elected body that will make all of the official decisions on behalf of residents – for a while, at least. Ideally, this term will fly by, as a benevolent and harmonious collective presides effortlessly over the association, its every action making residents rejoice.
Unfortunately, things are not always ideal, and a dysfunctional board can make its term feel, well...interminable. Whether be it through infighting, a tyrannical personality asserting undue influence over the organization, maliciousness or mismanagement, a dysfunctional board can sink an association mighty fast. Managers and owners need to be able to identify the telltale signs of a failing board quickly, or they risk loss of communal relations, funds, or – even worse – property value.
Breach of Duty
Boards have a fiduciary duty to act in the best interests of their association as a whole. Because of this, one could reasonably argue that the second a board becomes dysfunctional, it’s failing to serve its core purpose.
“I’m lucky to currently have a really good board of directors, but there are dysfunctional ones; we’ve all seen them,” says Christopher DeLong, a manager with CCMC, a community association management firm in Las Vegas. “I’ve had to come in after the fact to put together the pieces, and it’s unfortunate, because board behavior greatly impacts the residents of a community. It can devalue its property and create an atmosphere wherein people don’t want to live, which goes against the board’s greatest responsibility. So it’s crucially important that board members both understand their own roles, as well as those of others, like the community manager, the homeowners and the vendors. When they don’t understand these roles, or when they run for the board because they have an agenda or an axe to grind, that’s when the wheels start to come off the wagon.”
The bare minimum a board can do, should it want to stay on the straight and narrow, is to thoroughly review and understand its own governing documents. “When they don’t understand those or don’t abide by them, then go out and just decide willy-nilly what they want to do without community input, then the board is no longer making decisions in a transparent process,” DeLong warns. “A board must rely on vendor, manager or homeowner input.”